When PayPal came to India to they have faced many banking related issues with the Reserve Bank of India (RBI). RBI has some set of rules which they have forced on PayPal so that they cannot operate in India like the way they operate in most of the places in the world. Due to this special set of rules PayPal is unable to provide their normal service to the Indians. RBI has rejected PayPal business approval by showing that PayPal does not hold a banking license. As per RBI and banking rules in India, an authority or institution is only allowed to hold money to them if and only if they had an Indian banking license.

You have probably seen that almost merchants around the world use PayPal as their payment gateway. The reason behind this is PayPal is free of cost and many people have working PayPal account as it is around in the market for a long time. But as ‘Pay with PayPal’ is like the easiest payment method in most of the continent around the world. After a lot of requests and hassle RBI give some terms to PayPal by saying that if they want to do business in India, they have to follow these terms and these can’t be violated by any reason. The terms were:

PayPal can’t hold anyone’s money for more than 24 hrs.

No one will be able to add funds in PayPal India account.

All amount needs to be auto withdrawal after 24 hrs.

Every Indian user needs to provide PAN in their account.

More than $10,000 in single transaction is not allowed.

Inter-country payments within India are not allowed.

Only Debit/Credit cards allowed for paying through PayPal.

What about paying through PayPal?

After RBI has introduces 2 layer of authentication in India, most Indian debit and credit card has been restricted to use only through those websites which allow 2 layer of authentication, first layer is proper card information and CVV code and the second layer is 3D Secure Pin or Verified by Visa code, which has been generated by the card issuing authorities to cope up with the Government rules.

Now this is good for general Indian users who never even thought about doing International transactions and only make purchase within India using Indian sites like Flipkart, Snapdeal etc. These websites uses Indian payment gateway which allows 2 layer of authentication, but most of the International payment gateway be it PayPal or Google Wallet etc. allows normal 1 tire authentication system.

Now this is the place where the collision happens. If you try to purchase International goods from an International website using International payment gateway but provide Indian card which only authenticate payment when the payment gateway has 2 layer of authentication, you will almost become confused just to understand why your card is not working.

So, what’s the solution then?

In the banking race there are few banks who do allow International usage of their card, if you place a custom request to them. After you place the request, these banks remove the barrier of your card which is not allowing it to be used internationally.